First(603806) 天风证券·2025-01-19 06:22Investment Rating - The report assigns a "Buy" rating for the company with a target price of 20.18 CNY, based on a 2025 earnings forecast of 23.9 billion CNY and a price-to-earnings ratio of 22 times [5][47]. Core Insights - The company is a global leader in photovoltaic (PV) encapsulation materials, particularly in PV EVA films, holding approximately 50% market share. The company has also been expanding its new materials business, including photosensitive dry films [1][12]. - The profitability of the PV film business is expected to recover as particle prices rise, which historically correlate with film prices. The recovery in profitability is anticipated to follow the stabilization of particle prices [2][24]. - The photosensitive dry film segment is projected to become a significant growth driver, with the company leveraging a low-price strategy to penetrate the domestic PCB supply chain, achieving notable revenue growth [3][44]. Summary by Sections Company Overview - The company has been in the PV film market since 2003 and has become the largest supplier globally, with a revenue of 152 billion CNY in the first three quarters of 2024, a year-over-year decline of 9% [1][13]. - The revenue breakdown for the first half of 2024 shows that PV films accounted for 91.78% of total revenue, followed by PV backsheets at 3.85% and photosensitive dry films at 2.56% [21][12]. Financial Performance - The company reported a net profit of 12.6 billion CNY for the first three quarters of 2024, down 12% year-over-year. The gross margin has remained stable around 15% over the past three years [13][19]. - Revenue projections indicate a recovery in 2025, with total revenue expected to reach 255 billion CNY, driven by growth in both PV films and photosensitive dry films [47][48]. Business Segments - The PV film segment's profitability is closely linked to raw material prices, particularly EVA particles. The report anticipates that as particle prices recover, the company's margins will improve [2][31]. - The photosensitive dry film business is expected to grow significantly, with revenue forecasts of 13.6 billion CNY by 2025, supported by a strategy of low pricing to gain market share [3][48]. Market Position and Strategy - The company is well-positioned in the domestic market for photosensitive dry films, having established relationships with major PCB manufacturers. The strategy includes a focus on high-end product offerings and expanding market share through competitive pricing [3][44]. - The report highlights the potential for domestic substitution in the photosensitive dry film market, which is currently reliant on imports [36][37].